The present invention is directed to computer-implemented systems and methods for transforming data into risk metrics to quantify the risk associated with a particular supplier or suppliers, or the potential risk associated with a geographic location at which a supplier or global internal delivery center is located.
Risk assessment and management is essential for success of a wide variety of endeavors, including individual and organizational activities. An organization may face risk in many forms, including client risks, competitor risks, supplier risks, legal risks, technological risks, political risks, and environmental risks. Properly identifying, understanding and evaluating risks can allow an organization to prepare for and respond to events beyond its control.
For example, a company that offers goods for sale may purchase component parts for its goods from one or more suppliers. When selecting a supplier, companies typically look to more than just price. For example, reliable and timely delivery of component parts and whether the supplier is a sustainable business are also key factors when selecting a supplier. Companies often depend on suppliers to timely supply raw materials or other inputs to ensure uninterrupted sales and distribution of goods and services. A disruption in the supply chain may reduce the capability of a company to provide its goods and services, thereby reducing its sales and revenue. A disruption in the supply chain may also cause the company to breach contracts it has entered to sell its goods and service to customers, thereby subjecting the company to legal liability. A disruption in supply can therefore have severe consequences for a company. Identifying risks in the supply chain, including particular risks associated with suppliers, is critical to the ongoing success of an organization.
A supplier may face disruptions in its business for reasons directly relating to the operations and business decisions of the supplier, or for reasons wholly beyond the supplier's control. For example, a supplier that does not invest in training and development for its work force may face a high attrition rate and a shortage of labor. As another example, a supplier may depend on supplies or services from a third-party supplier, such as electric service from a government utility company, to maintain its business operations. In a third example, a viable and successful company can face disruptions because of location-based events beyond its control such as natural disasters, geo-political events, or changes in laws. Any disruption in supply from the third-party supplier may cause disruptions further along the supply chain.
However, risks associated with suppliers have been difficult to quantify. Consequently, acquiring a comprehensive understanding of the risks face by companies can be challenging. In addition, processing and analyzing the data in a timely manner is critical to taking necessary actions in response to the data.